The European Commission’s latest sector-specific guidance distinguishes between iron ore pellets, whose embedded emissions can be included in downstream steel calculations, and coke and lime, which are not treated as CBAM precursors under the iron and steel methodology.
The difference follows the legal scope and prescribed system boundaries of the European Union’s Carbon Border Adjustment Mechanism (CBAM), rather than indicating that coke or lime production is emissions-free. Iron ore pellets fall under CN code 2601 12 00 and are covered by CBAM, while lime kilns and coke-oven plants fall outside the defined system boundaries for iron and steel because their outputs are not themselves CBAM goods.
Precursor status determines which emissions enter steel calculations
For integrated steelmakers, the distinction creates an emissions-accounting chain that differs from a conventional cradle-to-gate carbon footprint. Pellets can carry verified embedded emissions into downstream calculations as a recognised precursor. Coke and lime may generate emissions across the wider industrial complex, but their emissions are not carried forward as CBAM precursor values under the steel methodology.
The distinction has direct implications for procurement and data collection. Steelmakers in Serbia and Türkiye sourcing iron ore pellets from multiple origins may need to obtain actual verified emissions data or apply the relevant default values for those materials. The same precursor-verification process does not apply to coke and lime in the steel calculation.
For importers and producers, identifying the legal status of each input is therefore essential when establishing the evidence required for CBAM reporting.
Indirect emissions treatment differs between pellets and steel
The Commission also specifies that indirect emissions are within scope for agglomerated iron ore, while iron and steel are generally subject to direct-emissions accounting under the current CBAM methodology.
This creates a further distinction between upstream pellet production and downstream steelmaking. The emissions categories included in the calculation depend on the product and its applicable CBAM rules, rather than simply on the physical contribution of each input to the overall manufacturing process.
Supplier data requests must follow CBAM requirements
For EU importers, the clarification highlights the importance of requesting evidence that corresponds to the statutory calculation. Collecting emissions information for every physical input without distinguishing recognised CBAM precursors from other materials can generate extensive documentation without improving the accuracy of the required declaration.
A more targeted approach maps each input to its legal classification, identifies the applicable system boundary and establishes which emissions data must be verified or reported.
The distinction also affects the assessment of lower-carbon steel supply chains. Lower-emission pellet sourcing can produce a measurable advantage in the embedded-emissions calculation carried into a complex steel good. Decarbonising coke, lime and other inputs may still have commercial or wider corporate emissions benefits, but those improvements do not necessarily translate directly into a lower CBAM figure under the current methodology.
As CBAM certificate costs become a factor in import economics, the legal treatment of individual precursors will influence which upstream emissions reductions directly affect the border-cost calculation and which primarily contribute to broader industrial decarbonisation objectives.
